Quebec driver assistance software provider LeddarTech made its stock market debut amid volatility on Friday on NASDAQ.
LeddarTech became a public company by merging with Prospector Capital, a special purpose acquisition company whose shares were already listed on NASDAQ. The operation allowing LeddarTech to raise US$66 million was carried out at a price of US$10.
In its very first trading session, LeddarTech stock closed at US$4.19 on Friday on the NASDAQ.
The volatility does not surprise the big boss of LeddarTech, Frantz Saintellemy. “The market has potentially reacted due to the warrants which give an additional share to shareholders who invested before LeddarTech’s IPO. It possibly had an effect,” he says.
“It was really exciting, that first day,” he continues.
Charles Boulanger’s successor as CEO explains that LeddarTech wanted to go public to offer its long-standing shareholders a more liquid instrument for their shares, but also to have access to a market that will eventually make it possible to raise capital to finance future projects.
There have been few IPOs over the past two years. The last large Quebec company to have carried out an initial public offering (IPO) to list its shares on the Toronto Stock Exchange is Coveo, a Quebec company specializing in artificial intelligence applied to electronic commerce. It was fall 2021.
The valuation of unprofitable companies has become less generous with the rise in interest rates and it is perilous to judge the market’s valuation of LeddarTech, according to Charles-Antoine Bérubé, an analyst at Medici, a fund manager. assets of Saint-Bruno-de-Montarville.
“It’s really difficult to assess because the company is not yet profitable nor does it have software revenue. We must therefore evaluate it based on future prospects without really knowing what the company will be able to generate in terms of revenue and profits,” he says.
Charles-Antoine Bérubé recalls that in the group of companies that have made the jump to the stock market in recent years, some are already experiencing problems on the markets. He cites companies like electric vehicle makers Lion and Rivian.
“Many investors bought near the peaks on the stock market and today find themselves with losses of more than 80%,” says Charles-Antoine Bérubé.
For an investor to say whether or not LeddarTech is a good investment at its current market value, they need to be able to evaluate the company’s technology, the analyst says.
“It’s difficult to say since we’re not specialists in the field. To invest in LeddarTech, you must be able to say that the technology is better than the competition and be able to affirm that there is a market for this technology. Currently, the business model is unproven. You also need to know if the competition is developing something better or not. It’s far from a simple investment. »
For all these reasons, this analyst prefers to pass his turn. He nevertheless emphasizes that it is “very positive” to see a Quebec company go public with the great mission of developing driving assistance technologies which will perhaps one day be marketed on a large scale to help save lives. on the roads.
LeddarTech’s business model is based on selling its software as a service, which should generate recurring revenue. The company does not yet have any commercial customers. Management hopes that revenue will begin to materialize in the next few years as customers move into production.
The company plans to announce new products at next month’s Consumer Electronics Show (CES) in Las Vegas. Frantz Saintellemy expects these products to revolutionize the industry in the way software is integrated.
The market for advanced driver assistance systems would be valued, according to him, at US$200 billion by 2030, while the market for LeddarTech software would be valued at US$32 billion by 2035.
The dominant player in the industry today is Mobileye, a company whose shares are also listed on the NASDAQ.
